A tipping point on tax

I aspire to make this the last ToryDiary post on tax for a few days but I make no promises! There is a leader in one of today's newspapers that makes some very interesting points on tax. Here are a few quotations from it:

"'In this world, nothing can be said to be certain,' Benjamin Franklin
famously noted, 'except death and taxes.' He might have added that few
things upset voters more than taxes on death."

"The Tory strategy is more sophisticated than just bribing the middle class."

"Labour is vulnerable to the charge that billions of pounds have not
been prudently spent. Meanwhile, the tax system has become needlessly
complicated. Tax credits are poorly understood and mismanaged. Millions
have been paid out by mistake."

"The Prime Minister knows that families on average incomes are starting
to feel overtaxed. That is why he tried a sleight of hand in his last
budget as Chancellor, cutting the basic rate by 2p only to recoup the
losses elsewhere."

"Meanwhile, higher interest rates have driven up mortgage payments,
draining money from households' disposable income. Those are the
circumstances that make voters look at their pay slips and quibble over
the deductions made by the state."

"The unwritten contract between the citizen and the state is up for
negotiation again. That doesn't necessarily mean taxes should be lower,
but it does mean the system should be fairer and more transparent.
Failure to deliver that is something from which Mr Brown cannot hide."

Where did that leader appear? The Sunday Telegraph? The Sunday Times? The Mail on Sunday? No, no, no, as a great lady once said. It appears in The Observer. It's quite something when the left-leaners at The Observer understand that the tax burden is really beginning to hurt people. I was on the panel for Radio 4's Any Questions on Friday night and former Blair adviser Matthew Taylor came within a whisker of admitting to me that we were at a tipping point on the debate on tax.

George Osborne writes for this morning's Mail on Sunday and promises to champion "the 'strivers' in life". Good. There is no big shift in policy from the Shadow Chancellor but in the article he appears to be adopting a slightly stronger tax-cutting attitude:

"As Conservatives, we want to reduce taxes over time, but I've made it
clear that any immediate reforms would have to be paid for with
corresponding tax increases elsewhere, so that public finances remain
safe We won't propose any changes which jeopardise the stability of the economy, or take money from important public services. But I understand how inheritance tax is fast becoming an unfair
tax on aspiration, so I want to make sure that the next Conservative
Government is ready to help the millions of families striving hard to
provide a better life for their children and who have had such a raw
deal from this Labour Government."

Comments

This is a very timely article. Tax relief on "strivers" at the next election can be sold to the electorate, despite what some others say. Voters know, indeed they personally witness, much of the waste Labour has introduced.

We should hold our fire for now, but then at election time be very specific about the wasteful spending we will eliminate and how the funds released will be used to relieve pressure on the domestic budgets of families across the country.

"I was on the panel for Radio 4's Any Questions on Friday night and former Blair adviser Matthew Taylor came within a whisker of admitting to me that we were at a tipping point on the debate on tax".

Congratulations, Tim, on what you said about tax - that you were more Redwood than Osborne on the subject.

The Observer article is remarkable as you say for its good sense on the subject:

"Labour is vulnerable to the charge that billions of pounds have not been prudently spent. Meanwhile, the tax system has become needlessly complicated. Tax credits are poorly understood and mismanaged. Millions have been paid out by mistake."

We must speak more positively on both wastage and simplification and attach figures to the savings that would obtain if the tories will make a firm commitment - before Brown does - to deal with both points.

Then we can face down Ed Balls and Alistair Darling who immediately accuse the tories of cutting back on services the moment tax cuts are mooted.

Promise to maintain Brown's levels of spending on schools and the NHS for at least three years and make tax cuts out of the savings that will by then be accruing.

PS Why did you not make any reference to IDS's superb report on the Broken Society on Any Questions?

Not to go all 'I told you so' but clearly George Osborne in the MoS is saying exactly what I described on Friday - IHT will be cut, and balanced out with taxes on bad things like pollutants.

The electorate understands that in times of market turmoil and Labour having messed up our finances it would be imprudent to promise immediate overall tax cuts before we've even got our hands on the books - Thatcher did not do that. Rather, like her, we will aspire to cut them as soon as is fiscally prudent.

Cutting an individual tax that everyone loathes like IHT, one that hits strivers and the middle class, is both good and right in and of itself, and also sends a very clear signal that we are a tax-cutting party who will tackle the rest of Labour's tax burden as soon as we can without imperiling services and the economy.

Looking at the Osborne comments I dont think we should count it as done that IHT will be abolished under a Conservative Government. Osborne is still being very coy about it. Hes using the issue because the press used it so much. He might as well ride that pony for a while until he can move onto talking about how to improve things for the very lowest, who are kept in deprivation through the tax and benefit system, which might bear a little more results than IHT payers who tend to be more wealthy anyway and would presumably be more Conservative leaning.

"..deprivation through the tax and benefit system, which might bear a little more results than IHT payers who tend to be more wealthy anyway and would presumably be more Conservative leaning."

What happened to the "and" theory, ie do both?

Now that expectations have been raised in the media IHTwise, a fast turn-off for those who might otherwise be more Conservative leaning (presumably including Labourites who bought their council houses?)would be to reject the idea,

In the meantime, maybe GB finds himself unexpectedly able to alleviate the situation by, e.g. increasing the IHT limits more than previously arranged, or by exempting primary residence......?

.
Cutting an individual tax that everyone loathes like IHT, one that hits strivers and the middle class, is both good and right in and of itself, and also sends a very clear signal that we are a tax-cutting party who will tackle the rest of Labour's tax burden as soon as we can without imperiling services and the economy.

Posted by: Tory T | August 19, 2007 at 11:17

The majority will still not pay IHT despite
Brown's attempts to apply it to more and more by neglecting to sufficiently raise the threshold. I believe the figure is 1 in 12 (it maybe lower, but still a fraction)households pay IHT.
If the Tories persist in stating that they will recoup the lost IHT revenue by raising Green taxes or any other taxes against the wishes of the rightly sceptical electorate, then Brown will have a field day in making the Tories appear to make travel the prerogative of the rich, hypocrites as well as wet.
Either do away with IHT completely without raising other taxes or - don't bother - you will be on a loser. Brown will point out that the Tories are helping the rich abolishing IHT, but they will be hammering ordinary families wishing to travel on holidays or to visit families abroad.

I have heard this morning that China is building large numbers of airports (it must be true it was on the BBC). Those global warriors demonstrating outside Heathrow obsessed against air travel, and to the gratification of the BBC, are wasting their and police time and our money. I wont be voting for the Tories if they are going to repeal one tax and the replace it with others.

Voters will only believe in a tax cutting agenda when the the Conservative Party starts to itemise where it will save taxpayer's money. Osborne must have the courage to say that quangos will be scrapped, that asylum and immigration is costing too much and that a life on benefits for many is not acceptable.

Dontmakemelaugh "I wont be voting for the Tories if they are going to repeal one tax and the replace it with others."

It seems to me dontmakemelaugh that unless you get exactly the same manifesto as in your head then you wont vote tory. In the real world most people appreciate they won't get everything they want, but balance their decision. If when balancing your decision you choose not to vote tory that is your choice. How about you tell us what your manifesto is. If it is any good maybe it will become policy.

Although George Osborne is right to say we can only have tax cuts when the economy allows it, I'm hoping he will find a way to reward personal initiative. Business creates jobs and we all must remember that. George Osborne must deal with the shamble of 'Tax Credits' The entire system is bizarre and requires microscopic scrutiny. Why is it that a person can receive more in state benefits if they are working than if they are on the dole? Why are people getting money they are not legally entitled to? What are the psychological effects of Tax Credits on working, are people opting for part-time work to be better off financially than if they were in full-time work? The Tax Credit half work/half benefit system ought to be dismantled.

Just listened to AQ, spot on with what you said Tim. I share your political concerns, and I do think we should be looking to relieving the burden on the poorer rather than the richer first. But I sense a more firmer line on tax from the party now, and I'm liking it.

Of course Laffer was right. It is key that we make British both attractive to outside investment and supportive of internal growth. That leads in only one direction: seriously lowering the burden on business, starting now, and ending never. It is a competition: big business will go elsewhere if it's better for them.

I very much agree with mark (13:21), itemisation is key. We need to offer areas in which we will save money, rather than outright promising general tax cuts (or indeed, promising to think about promising general tax cuts).

That said, I very much welcome the line the party is beginning to take. Thanks to Redwood for kicking this off, I think!

Very true Ash, business drives our economy and creates the goods, services and jobs that our people need, not government. We need to turn people away from the socialist myth that cutting tax for business is somehow rewarding the rich. Reducing taxation for business benefits everyone, business profits, business grows and produces more of what our nation needs.

There undoubtedly is a 'tipping point' in public opinion on tax, where as the tax level rises, the public suddenly decide that the money is not being put to good effect. The best example of an authority crossing it was just over a century ago in the London County Council. For years, the Progressives (ie Liberal Party) had run the County Council and at each successive election the Municipal Reformers (ie Conservatives) had said that the rates were too high and were being wasted, but been defeated because most Londoners preferred to take service improvements.

The Municipal Reformers were just on the point of saying that they would never win when the Progressives over-reached themselves after the 1904 election. A good election campaign ensured that the Municipal Reformers won in 1907, and the Progressives never regained control of the council.

However, the initiative is always with the government in this situation. A Labour government is quite capable of making sure it stays on the acceptable side of the tipping point, so that it can point to likely damage to government services if government revenues are reduced. This argument cuts both ways: a Conservative government is capable of cutting investment in services to such a point that the electorate vote it out and don't care if taxes have to be improved.

For me the tipping point has passed. The problem has been that the opposition parties have not provided a comprehensive view of how they could change the current situation without negatively effecting either the economy or critical front line public services.

I think that is now changing. In the excellent reports the Conservative party are now publishing they are now beginning to provide an alternative route. I believe they are beginning to succeed in gaining people's interest and recognition.

In these reports there are sufficient proposals to resonate with the vast majority of people.

This week we saw a knee-jerk panicked response from Labour. Darling was poor, Burnham was ridiculous and where's Gordon? - if there was anybody who could critique the proposals surely it would be Mr Stealth himself. But no he's hiding in his bunker in Cowdenbeath (presumably he didn't want to answers questions about the financial markets).

Much of the tax discussion over the last few days has suggested that John Redwoods proposed tax cuts can only be funded by Green Taxes. I disagree, the following article in the Telegraph clearly indicates there is much fat in the Public Budget that needs to be shed.

Reading the article £167 billion is spent on Quangos - more than the cost of the whole health service. Surely, there are £21 Billion savings that could be found here. There seems to be extensive duplication between Government Department and Quangos in many places.

Hopefully, Stephen Dorrell's Public Service Reform report can address this by both safeguarding effecting spending on critical front line services such as Health, Education, Criminal Justice etc. whilst cutting the excessive waste of Quangos and Central Government Departments.

Abolishing IHT just a gesture to the balding gits who are this party's main target constituency. There is value in ensuring they don't stay at home on election day of course, but if you want a tax cut that helps everyone, just raise the tax threshold. Be ambitious: £10k or even £12k is a good starting point. Lift lower-earners and part-timers out of the tax system entirely. Reintroduce the starting rate of tax (how on Earth did you let Gordon get away with doubling the tax burden of the country's lowest paid???)

Pay for it with a slight rate rise higher up, and a massive cut in public waste. Balance it such that all but the grossly overpaid pay less tax overall.

High taxes are a issue for everyone. Even Guardian columnists are biting their lips on the issue. But if you are going to commit yourself to a tax cut that only benefits 1-in-12 of the population (no doubt concentrated in your safest constituencies anyway) then prepare to lose the next election.

Now that conservative MPs are producing some sensible ideas, we get more sensible reactions from our contributors. Tony Makara is smack on the mark with his comment @ 13.46:

"George Osborne must deal with the shamble of 'Tax Credits' The entire system is bizarre and requires microscopic scrutiny".

I also agree wholeheartedly with Ash @ 13.50:

"I share your political concerns, and I do think we should be looking to relieving the burden on the poorer rather than the richer first".

It is a typical Gordon Brown nonsense that we start taxing low earners at £5,200 (help, Mark Wadsworth) and then, because they can't possibly live on what they have left, they have to apply for tax credits. That is both demeaning and quite unnecessary (also bureaucratic and expensive to administer).

We want to hear a clear commitment from the tories to allow people to earn up to, say, £10,000 a year without being liable for any income tax and we would like to hear it before Gordon Brown has the bright idea of doing it.

Where IHT is concerned, if it is not an expensive tax to collect, is there an argument in favour of continuing to charge it on estates of £1M +, at least initially?

If we have indeed reached a 'tipping point' (an overused phrase in my view) then might it quite likely that Labour will be the ones to actually enact reform, flatfooting us yet again?

We have yet to hear Darling say much or see him do much. Tax reform would be a major change of direction and Darling's contribution to the Labour revival under Brown. Act Two of the Labour recovery narrative.

It would also completely obliterate us and render the debate we've been having utterly redundant.

Let's hope I'm just thinking the worst for our party and not the country.

Dontmakemelaugh "I wont be voting for the Tories if they are going to repeal one tax and the replace it with others."
It seems to me dontmakemelaugh that unless you get exactly the same manifesto as in your head then you wont vote tory. In the real world most people appreciate they won't get everything they want, but balance their decision. If when balancing your decision you choose not to vote tory that is your choice. How about you tell us what your manifesto is. If it is any good maybe it will become policy.
Posted by: voreas06 | August 19, 2007 at 13:35

In your first sentence, voreas06 you are very much in line with my thoughts, although in certain areas I would be willing to cut a bit of slack. In your second sentence, more and more appreciate (not tribal voters) that they will get little of what they want and so don’t bother to vote or vote other than Conservative (I believe more are voting for what the polls call ‘others’).

You will probably wont be surprised to know that I, not being a politician seeking power, that I do not have a manifesto, neither do I make motor cars. When I go to buy a car (or anything come to that) I have an idea in my mind of what I want. It is true that I may not get all that I want in the product, but there will be fundamentals from which I will not deviate and so not buy if they are not part of the deal or product. The Tories would do well to remember that they are now trying to sell a product and that all successful cold selling salesman have one thing in common: the ability to create a need in the customer and hence the desire to buy. A take it or leave it attitude will fail. Is it, “Stand up and speak up” or is it, “Sit down and shut up?”.

I will tell you what I wont be voting for and for what I will:
I wont be voting for a party that wishes Britain and England in particular to be governed by Brussels and cannot be taken seriously regarding repatriation of power; I wont vote for Tories that fail to bang on about immigration; but that do bang on about Greenery and raising taxes that will achieve zero such as the aviation tax; nor for a party that will not correct the financial and voting imbalance in the Union that does not recognise it requires an English parliament to correct it; I wont be voting for a party that denigrates our alliance with America in favour of the EU and is weak on defence; for a party that declines to cut taxes; is unpatriotic or declines to fly the flag; supine dealing with home grown terrorism. Off hand, voreas06 those fundamentals spring to mind. Now for some extras – two for the price of one so to speak:

Law and Order, once considered a Tory pillar, needs rebuilding. Police officers of the rank of commander and above involved in the day to day running of a Division including the commissioner should be voted in by residents on the patch. A referendum should be held on the return of capital punishment (I hope you haven’t fainted) for certain categories of murder and drug running.
The constraints on behaviour imposed by the observation of the tenets of the Christian religion have become weakened in our ‘permissive society’. Secular law must have meaning and be respected (another word for fear).
In association with that, the waffling on about returning discipline to schools means nothing; the appointment of someone responsible for administering disciplinary measures i.e., corporal punishment is needed. Give me the boy until he is seven and I will show you the man springs to mind and perhaps respect and good manners will return.
The NHS needs sorting especially in regards to cleanliness – the sick whenever possible are voting with their feet and going private.
Transport needs to be integrated with more roads, increase taxes on transpost at your peril.
That is enough to be going on with – I am off for dinner. You want me to vote Tory – then persuade me – sell it to me…

I am back – dinner was great and without Broon sauce. You are right 06 (I hope you don’t mind me being familiar by calling you 06?) we can’t have everything we want and we have political parties to prove it and to deny much of it - it sometimes seems.
Now what would I vote for: Snigger and laugh as you may, but I would have voted for IDS had he remained leader – I did not vote for Howard; I did not believe that he would have been firm enough with the EU, he had his chance and muffed it.
You want me to vote Tory – persuade me; sell it to me.

10 years of Labour government should be enough to do that Don'tmakemelaugh.I know you've been delighted with the triumphant success of the war in Iraq but what about the rest of it,are you really happy with that?
I thought you did well on Any Questions Tim but was very suprised when Mathew Taylor claimed only 6% of estates were liable for IHT. Is that actually true or is it another Blair/Brown lie?

First up I don't work for the party so I am not going to sell you anything, but I will answer your manifesto as it is interesting.

"I will tell you what I wont be voting for and for what I will:
I wont be voting for a party that wishes Britain and England in particular to be governed by Brussels and cannot be taken seriously regarding repatriation of power"

Your only chance of getting a party in power that is even remotely eurosceptic is to vote conservative, or else go along with Gordon to complete Euro subservience.

"I wont vote for Tories that fail to bang on about immigration"

I think the party line is fairly clear, some immigration is good but there needs to be far more control, again compare and contrast with Labour which is basically open door regardless of their spin.

"but that do bang on about Greenery and raising taxes that will achieve zero such as the aviation tax"

I am not sure which air tax you mean as I don't think anybody has announced a tax. Never mind Labour nonsense. Regardless I disagree, tackling climate change is important, or if you like tackling energy security and having less polluted cities seems like a good idea to me.

"nor for a party that will not correct the financial and voting imbalance in the Union that does not recognise it requires an English parliament to correct it"

Well you either have english votes for english matters or the status quo. Personally I agree with you I would rather see the Barnett formula changed as well.

"I wont be voting for a party that denigrates our alliance with America in favour of the EU and is weak on defence"

This is just not the case, Cameron doesn't want a slavish relationship with either the US or the EU.

"for a party that declines to cut taxes"

Again the choice is yours possibly some tax cuts or with labour likely tax increases.

"is unpatriotic or declines to fly the flag"

I don't know what you mean.

"supine dealing with home grown terrorism."

Again I don't know what you mean, but if you mean 90 day detention it would be counter-productive, and if you mean ID cards they would be ineffective, expensive and are just their to give Labour more control over our daily lives as well as probably some naughty little backhander to party donor's(let's see who bids). I think Border police, use of intercept evidence, questioning after charge, targetting foreign imams, increased security service funding are not supine measures.

"Police officers of the rank of commander and above involved in the day to day running of a Division including the commissioner should be voted in by residents on the patch."

how many elected police officials would that make?

"A referendum should be held on the return of capital punishment (I hope you haven’t fainted) for certain categories of murder and drug running."

No I disagree, the chances are too high for a wrongful conviction and there is no way to make amends for executing the wrong person. Also if you believe executing terrorists is a good idea you are only going to make them martyrs.

"The constraints on behaviour imposed by the observation of the tenets of the Christian religion have become weakened in our ‘permissive society’. Secular law must have meaning and be respected (another word for fear)."

I don't get what you are suggesting here are you saying we need to go back to Old testament style law. Also respect is not the same as fear. If I respect someone I believe he/she is wise and fair in their treatment of others and even if they were weakened I would not turn on them. If I feared someone the moment they are weakened I would happily turn on them, ask someone like Caucescu or Mussolini.

"the appointment of someone responsible for administering disciplinary measures i.e., corporal punishment is needed. Give me the boy until he is seven and I will show you the man springs to mind and perhaps respect and good manners will return."

I received corporal punishment at school and most of the time I deserved it. However what I remember most is the one time I received Corporal punishment from our Church of England school head, and I hadn't done what he claimed. I didn't and don't have any respect for him because he was in the wrong and indeed I lost an awful lot of respect for the church because of him and people like him. So I am against corporal punishment but believe control is needed in schools, So personally I would put CCTV in classrooms (or even on teacher's hats ala the police) so if little Johhny does misbehave there would be little doubt about whether he is guilty or not.

"The NHS needs sorting especially in regards to cleanliness – the sick whenever possible are voting with their feet and going private."

Fair enough, the Conservatives want to devolve day to day control to a non elected board. Personally I would go much more local control with most health treatment with perhaps 10 hospitals that are leaders in their field. I would also de-layer management and make pay partially dependent on patient satisfaction levels, I would also bring cleaning back inhouse.

"Transport needs to be integrated with more roads"

I disagree personally I would not waste the money on roads I would rather see it being offered as an incentive for home working. Thereby reducing congestion, the need for roads and CO2 levels, by the way giving business a tax cut and allowing them toi reduce costs.

"10 years of Labour government should be enough to do that Don'tmakemelaugh.I know you've been delighted with the triumphant success of the war in Iraq but what about the rest of it,are you really happy with that?
I thought you did well on Any Questions Tim but was very suprised when Mathew Taylor claimed only 6% of estates were liable for IHT. Is that actually true or is it another Blair/Brown lie?"

Hi Malc,
I would be delighted with a successful war in Iraq and I would hope all Britons would (I wouldn't go that far with the BBC or George Gallaway) and if we leave in a hurry so eventually would you have been.

Thank you for observation that 10 years of Labour should have been enough to persuade me to vote Tory and, indeed Malcolm, I would love to, but I understand that Mr Cameron sees himself as the Heir to Blair so there does n't seem much point there, I mean, really do we want another Blair? What do you think?
As for poor Mr Howard he meant well, but he was confused (I wouldn't want you to think that I did n't like Michael - I did and I complained to our impartial BBC about a nasty interview by one of their impartial reporters who slagged off Michael impartially when Michael was making his acceptance speech). Anyway we don't want to go over old ground do we. Mike should be left to enjoy his confused retirement - if Cameron will let him.
No, I am sorry Malc you have n't persuaded me that because of 10 years of Labour I should vote Tory. Why should n't I vote for another party if Cameron appears to be to the left of Labour? Come on Malcolm create the need, create the desire, I want to be politically made love to. You can't get the staff this days - apart from Poles (I'll admit it - it is not easy with the BBC peering over your shoulder to vote Tory). Sell it to me.

With regard to only 6% of households being subject to IHT I heard it was about 1 in 12 which would be about right (I heard it on the BBC - so it could be wrong).

PS I thought I would cheer you up - I haven't voted labour since my voice broke and the achne departed - but hang on! Heir to Blair does have a ring (like the ring in a grenade). Hmmn.

I still find it incredible that Brown has deliberately and cynically pushed taxes up for middle to lower incomes bracket to such incredible levels, and still tries to portray us as a low tax economy.
I think it is now time to really start attacking hard on the dishonest way it he operates.
WFTC is the best example of Brown taking more from hard working families so that he can watch them jump through hoops to get just a little of *their* own money back. Brown knows that the harder it is to claim WFTC the less people take them up, but he ends up having to use what he saves and more to pay for it all and the colossal mistakes the system incurs.
If he did this in a real business he would be sacked. If we did away with them and introduced a simpler fairer tax system not only would they be better off we might even be able to manage a genuine reduction in the levels of tax paid by poorer families. That really would be helping.
Came across a story of someone who has filled their forms our correctly twice and been overpaid twice. The way they badger and harass people who through no fault of their own have been overpaid is disgraceful.
The couple decided to take out extra part time work rather than touch them again, so thanks Gordon, they will be working longer to pay for the extra tax you intend to take off them after your last budget!
But guess what, despite getting a letter to tell them that they had not filled any forms so would not get anything, a week or two later money started to be credited to their account, you could not make it up !!

Thank you for the courtesy of your reply as above. We will just have to agree to disagree - East is East and West is West and all that. I will content myself with a small point. Normally, I understand, a police officer of the rank of commander is in charge of a police district known as a Division; so there would only be one officer to vote for apart from the chief constable. If you want to get rid of political correctness in the police service then it must be answerable to the public and not politicians alone. The West Midlands Police seems a case in point with its strange decision to refer a complaint to OFSTED instead of invesigating the complaint of stirring hate crime and coming to a conclusion as to whether a criminal offence had been committed or not. What are the police being paid for?

Apologies for not having more time to respond to your criticisms, which I most assuredly would do given that time. Thanks for the attempt to persuade.

We really need to get this tax argument right and clear. Redwood has made a good start but it must interlink coherently with the other policies. While I dislike IHT intensely and think it should be reformed, I think we should be focusing more on cutting tax on the low paid and encouraging enterprise by cutting corporation tax. I also think we need to look at ways to encourage more civic behavouir by having ways of cutting council tax on those that undertake duties that help the community and bind communities together and thus save us money. Also part of this debate is the question of localism, with those decisions that can be better made locally being more efficiently made and saving the Govt money. If we get all this right as a coherent set of ideas that add up to what we stand for, then we can get the better of Labour,

"We really need to get this tax argument right and clear. Redwood has made a good start but it must interlink coherently with the other policies"
Totally agree Matt, like you I dislike IHT and I think that the lower paid need first call on any money that could found and used for tax cuts.

Really sensible post Don'tmakemelaugh.Not for the first time you failed to live up to your name! The idea of making 'political love to you' does, as you can imagine make me retch so I think we'll have to do without your vote in the future. Still if your constiuency elects by 1 vote some Europhile Lib-Dem or Labour MP I hope you'll feel proud.

I have never understood why those of us who advocate lower taxes are dubbed "right wing"!

The truth about taxes, whether it is Income Tax, VAT, Excise Duty, Inheritance Tax, Insurance Tax or any of the other various stealth taxes that Gordon Brown introduced when he was Chancellor, is that those taxes have a disproportionate affect on the poorest members of society. In short; taxes hit the poor hardest!

It is an incontrovertable fact that the very wealthy have acountants and lawyers to work out ways in which to evade or minimise their tax burden, those less well off, and I include in this category many so called "middle class" people, do not have the same luxury.

Any increase in the cost of living, whether inflation driven or tax driven, has more of an impact on those lower down the social ladder, than on those at the very top.

For instance, a 2p per litre increase in petrol prices barely registers on the radar of somebody owning a Rolls Royce or a Porsche, but often means that an old age pensioner can no longer afford to use his, or her, car to visit the nearest post office to collect their pension.

A 0.5% increase in the mortgage rate might prove inconvenient to somebody who owns a £1 million house, but it could see somebody living in a £100,000 house, on a low income, being unable to pay his mortgage and losing the roof over his head.

Equally, a reduction of a penny in the pound on Income Tax will have a negligable impact on somebody earning £200,000 a year, however, it will make a huge difference for somebody earning £20,000 a year.

So wanting to reduce taxes is not really a "right wing" aspiration; it belongs on the left of the political spectrum, which is why we Conservatives should not be embarrassed about calling for lower taxes, instead, we should set out the moral and economical argument for a low tax economy, with both conviction and pride.

I certainly agree with that – and that is why in any re-balancing of the tax system, we should target the very poorest first. IHT may be unfair, as are many aspects of our tax system, and may catch many individual cases in its net that were not intended originally. I am not convinced, however, that it should be the central plank of our tax policy going in to a GE – perhaps only one part of a longer term plan. Reducing the level of IHT might be the right thing to do in the longer term, but I am not yet convinced that it would help either social mobility or any of the other issues in the “broken society” agenda.

I think we need to look first towards the poorest in society, those struggling the most to bring up their children in whatever circumstances they find themselves. Then we need to look towards the “strivers”, perhaps by unwinding some of Brown’s more perverse disincentives in our tax system.

In this latter point, I have an illustrative example from one of my own work colleagues. This guy joined our department as a technician, and studied to gain his degree (supported by his employer) while working full-time and bringing up his kids. I remember vividly him sitting at his desk after a performance review where he gained a promotion, working out how much worse off his family would be if it lost them their tax credits as he expected.

The example above is a bizarre inversion of our values – Conservatives should be the first to say loudly that if you seek to better yourself, and you work hard to provide for your family, then they should be the first to benefit from that, not the last.

A group called Tax Justice Network made the following comments Richard Murphy was the Author his comments are totally unacceptable on tax. John Redwood wrote a fevered article in the Telegraph today complaining no one has taken his message on the economy seriously, for which he blames the BBC. It was ever thus in the case of a person who has no argument to present.
But there in the middle of the story was a paragraph that stood out:
I have gone hoarse explaining that Ireland cut tax rates on business, and lowered capital taxes, and enjoyed a large surge in revenue from the extra growth it generated. Ireland shows you can have it all - much lower tax rates, and more revenue and public spending per head.
As ever, Redwood is wrong.
Spending per head went up in Ireland because of the receipt of massive EU subsidies. And the spend rate before they flooded in was miserable.
Corporation tax in Ireland also went up, not down. The most successful and largest companies in Ireland in the 1980s and now are foreign owned. They paid 10% in the 1980s and 12.5% now. That’s an increase, not a decrease. An increase of 25% in fact. No small amount.
But Redwood wouldn’t let that get in the way of his Laffer based madness, would he? Even if the truth is the exact opposite of what he claims.
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THE CONSERVATIVES: THE NEW FRIENDS OF MONEY LAUNDERERS AND TAX EVADERS
18-AUG-07
John Redwood’s tome for the Conservatives continues to offer insane policy suggestions. Take this one:
[I]t would be useful to have an independent study of the costs and benefits of the anti-laundering regulations hurriedly imposed on banks in most countries after September 11, 2001. Initial impressions from industry specialists are that these have done much more harm than good. Economic growth can rarely happen without flows of funds. Where these regulations have blocked innocent financial transactions, they will undoubtedly be reducing the prospects for economic growth not just here, but worldwide.
Now, I’m far from saying the world’s money laundering rules are working as they should. They don’t. But this is insanity. Redwood clearly wants the free flow of capital without questions asked. The result? More capital flight from the developing world and a massive increase in tax evasion. All of that will, of course be shovelled into the London housing market and the London stock market. Which Redwood would then call growth.
But the cost to the people of the world, let alone it’s developing nations, will be catastrophic.
And then there’s the issue of these requirements being international commitments made by the UK which we do not have the right to abandon at will. But Redwood wouldn’t worry about that.
And there is of course the issue of terrorist financing and the crime that is always associated with tax havens. But is Redwood worried about that either? No, of course he isn’t.
But he will have kept his friends in the City and in the world’s tax havens happy. Who worries about international obligations, the poor people of the world, crime, terrorism or tax evasion if you’ve managed to do that? Not Redwood, clearly.
PS I bought the Daily Telegraph today to try to find someone who liked what Redwood said. Even they can’t raise any enthusiasm.
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INHERITANCE TAX: THE NONSENSE THE NON-TAXPAYER’S ALLIANCE SAY
17-AUG-07
My media day continued. I did Radio Wales tonight with Matthew Elliott from what is called the Taxpayer’s Alliance.
He spoke complete nonsense. Like the speaker earlier in the day he thought inheritance tax was paid on small businesses. Where do these people come from?
Then we had the argument:
People don’t like this tax
Which is quite absurd. No one loves taxes. I don’t. But I do like what they do. So it’s an absurd question to ask if people like any tax, or not. Of course the answer will be that they don’t.
But worst of all is the usual twaddle he peddled that Inheritance Tax is triple taxation (apparently it’s income tax, stamp duty and Inheritance Tax). There are two answers to this:
1) There is lots of triple tax in this country. Take earnings form employment spent on alcohol: that’s income tax, national insurance, VAT and alcohol duty for starters. So we have quadruple taxation. So what? This spreads the tax base. That’s the basis of good tax design.
2) It so happens there isn’t triple tax on a house included in an estate charged to inheritance tax. First of all it’s the estate that is charged, not the house. So that’s only one tax. But even if the whole estate were a tax then a) the house will almost certainly represent an inflated value probably hundreds of times the total paid for the property if the deceased is of actuarial life expectancy. I recall , for example, my parent’s first house cost under £2,000. It must be worth more than a hundred times that now. If included in their estate now the increase in value would never have been taxed, the amount subject to income tax to pay for it would have been less than £2,000 and the stamp duty under £100. That’s not triple taxation. Given the generous allowances for Inheritance Taxation that’s much less than single taxation.
So let’s stop the misrepresentation and get down to the facts. The reality is that the argument about Inheritance Tax is about greed: people saying “I want to keep all the cash and want none of it to go to the State to create greater social justice and opportunity for those who might never be in the top 7%” (and that’s 93% of people, by definition). And greed is always ugly, which means it’s hidden behind lies and false arguments. .
Second, let’s be thankful that at least one tax might be slightly deflating the housing market. After all something has to do so because anyone under 35 now relies on having wealthy parents to buy a house. Nothing could crush the enterprise spirit more than this. What the Tories need to realise is that if every penny you have has to go into paying for a house, there is no chance of taking the risk of starting a business. You’re in the drip of death of a debt for life (and mortgage by the way means ‘grip of death’).
But despite this the Tories want to abolish the only tax that is doing anything to stop this economic and social madness. I despair.
And I’ll be candid: I distrust their motives. Because I don’t think they’re fools. And if that’s the case then they know all I’m saying is right. Which makes their presentation of their tax policy far removed from the substance of the policy they’re really pursuing, which is one of tax cuts for the rich of the sort Bush pushed through in the States at the start of this century, and which has created so much harm and not one jot of benefit there.
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INHERITANCE TAX: IF YOU’RE GOING TO TALK ABOUT IT PLEASE UNDERSTAND IT
17-AUG-07
I’ve just done Radio 5 Live. We were meant to be discussing inheritance tax.
Scheduled start time was 9.00. On air time was actually 11.45.
Then I was pitted against Sylvia Tidy Harris, a woman best noted for saying no-one should employ women below aged 45 as they might have children.
She presented two scenarios where she said inheritance tax might be due. First case:
Two young people start in the City on salaries of £35,000 each and buy a house together worth £300,000. Immediately they’re chargeable to inheritance tax.
This is what’s wrong with this:
1. It’s not related to real life - a tiny proportion of people start on £35,000. The average wage is £27,000. This women is a fantasist to think this is normal.
2. These people would have a mortgage of maybe 100% of the value of their home. That’s offset against it’s value for inheritance tax. So net worth is zero. No inheritance tax due.
3. She interjected:
No, their parents bought them the house
Now we have a new scenario. They do have an asset worth £300,000. But it’s shared. So that’s £150,000 each. So there’s no inheritance tax. It starts at £285,000. And let’s also be clear. They’ve got to die first. Not likely.
So, we move on to her second claim. This is:
A person owns an ordinary house worth £200,000 and a small business worth say £150,000. It’s so unfair they have to pay inheritance tax.
Which is why, of course, they don’t owe any. All small unquoted businesses are exempt from inheritance tax.
In other words this person had no idea whatsoever what she was talking about and had the nerve to go on national radio and talk about it. I was furious. I fear it showed.
But is this the propaganda the Tories will resort to to get tax cuts for the rich? I think so. Sad, isn’t it?
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THE TORY’S TAX MADNESS
17-AUG-07
I guess I should blog about the Tory’s tax plans.
But I can’t raise enough enthusiasm to comment on such obviously mad strategies as those they are proposing without any comment offered by them as to who will bear the cost in society of the boost this whole strategy is designed to give to the best off .
And please don’t doubt me: this strategy is blatantly designed to increase the wealth gap in the UK. Why else cut inheritance tax, corporation tax, capital gains tax, stamp duty on shares but not housing and never once mention taxes paid by the 90% of the UK’s population?
This is the politics of greed. Thankfully this will be electoral suicide for the Tories. Yet again. Which is, however, bad news for democracy in the country.
But what did Cameron expect if he asked John Redwood to talk about tax? The man is semi-detached from reality, at best. And the thinking on offer is evidence of that if ever it were needed.
nts Richard Murphy was the Author

"The example above is a bizarre inversion of our values – Conservatives should be the first to say loudly that if you seek to better yourself, and you work hard to provide for your family, then they should be the first to benefit from that, not the last."

Have just finished reading Tom Bower's book on Gordon Brown, well worth reading. The duplicity that Brown employs when he presented his budgets is breathtaking. If Brown had really wanted to help the lower paid who strived to help themselves he could have made taxation simple and fair by taking them out of it all together, it would have been the cheapest option, but it would have been extremely honest as well.
That he has now chosen to scrap the lower 10p tax rate and raise National Insurance thresholds instead with an almost "let them eat cake" attitude of they can claim back in WFTC was typically of him. It is still going to happen and people are going to feel some financial pain, just not his rich friends like Polly Toynbee! Don't you just love been lectured by her on Redwoods policies while she defends this kind of sleight of hand from her pal Gordon.

It was all Mr Brown's fault. Or, if it was not entirely his fault, he had certainly done nothing to bring to an end those dubious financial devices which were at the bottom of our present troubles. And yet, as far as I know, neither Mr Cameron nor Mr Osborne has said a critical word about the financial excesses of the recent past.

I couple the two because Mr Osborne is supposed to be Mr Cameron's friend and he is Shadow Chancellor. Indeed, he appears to occupy the position he does simply because of his relationship with the young leader. There can be no other plausible explanation for his elevation.

I thought I would give you a taste of Richard Murphy of Tax Justice Network in an earlier posting he and he and his group have an obsession on taxing people and have years have urged Europe to put pressures on all offshore areas. He has powerful friends in Michelle Augean one of the policy makers on tax in Europe and Jeffrey Owens of the O.E.C.D.
Somebody even just recently put him up as adviser to Gordon Brown
I am aware, as I have it drawn to my attention, that there is a petition on the 10 Downing Street web site that says:
We the undersigned petition the Prime Minister to appoint Richard Murphy, the head of the Tax Justice Network, as a special adviser to the government on tax avoidance issues.
Submitted by Alex Marshall - Deadline to sign up by: 09 January 2008
I make clear I did not submit this, and was not aware of it being submitted. It’s kind of Alex Marshall (with whom I am not, as far as I know, acquainted) to have such confidence. I should however point out that I am an adviser to the Tax Justice Network. My friend John Christensen is its director.
Richard Murphy has such an obsession on tax he is attacking the UK on the domicile laws on a programme called Hecklers - BBC Radio 4 The programme goes out next Wednesday (22 August 2007) at 8pm (20.00
Nearly every body knows that all the low tax areas in the World are much more vibrant than high tax areas such as France and Germany .Maggie’s ideas years ago was to aim for a top tax rate of 20% which would have made us the no1 investment target in the World. but of course we would have to have a system of control like Australia that has strict immigration policies

To further illustrate Tax Justice Network obsession on tax read the following headings on their web site. How people can have these cock eyed views is beyond me.
"Tax Research UK" - 7 new articles
1. Inheritance tax: The nonsense the non-Taxpayer’s Alliance say
2. Inheritance tax: If you’re going to talk about it please understand it
3. The Tory’s tax madness
4. There is a crisis - so suspend FRS 17 now
5. BDO US - going under?
6. Hecklers - BBC Radio 4
7. The UK ‘tax amnesty’ - PWC’s view
8. More Recent Articles
9. Search Tax Research UK
I hope the Tax Alliance repudiate these rather stupid statements from a left wing group

I don't believe for one minute that Osborne intends to abolish IHT. He's just trying to dodge yet another 'left v right' row in the press and insofar as the story is now wrapping fish and chips he's succeeded in his aim. The 'Tax Cuts Bad' Cameroon strategy remains intact.

Of course let's cut IHT by raising the threshold, but let's major on cutting taxes paid by the living, not the dead. A restoration of the lowest tax band on income tax would help everyone, including the low paid.

As for IHT, in my experience most middle-aged people become outraged about it only when they are actually in the process of losing some of their inheritance (something I am about to do myself). That sense of outrage, however, does tend to be cushioned by the pleasure of receiving an unearned windfall.

Most normal younger people do not spend all their time worrying about how much money they are going to inherit when their parents die, and these days you will find that vast numbers of older folk are reducing their IHT burden by taking world cruises courtesy of equity release.

It is also, I am sorry to say, so typical of a certain type of Tory activist to assume that everybody else pays IHT just like them.

In decades of attending party conferences I never quite heard anybody echo the Duchess of Windsor's infamous dictum that 'Every fool knows that with daytime clothes one wears gold and with evening clothes platinum' , but I came remarkably close to it.

"Of course let's cut IHT by raising the threshold, but let's major on cutting taxes paid by the living, not the dead. A restoration of the lowest tax band on income tax would help everyone, including the low paid."

Oh god, I am going to have to go and lie down to recover from the fact that Trad Tory posted a comment on the subject, without insults and I agreed with him!!

I should add that the fact that the lowest paid were targeted by Brown to pay for a *supposed* tax cut needs to be highlighted again and again by the Conservatives. It was done just so Brown could get one up on Cameron, wrong foot him in his response and grab a headline to appeal to the middle classes which is political opportunism at its worst!
This Labour government is very quick to throw the word opportunism at the opposition, lets throw it back at this dishonest bunch who will use any kind of spin to keep the illusion up that they care about the less well off in society.

Patriot - sensible idea but why announce that now? Would be better in the run up to the election. Everyone's so keen on us announcing the last detail of our intent; that just gives Gordon a chance to tactically take over the popular bits. Remember Howard's promise to cut OAP council taxes; announced too early so Gordon "gave away" what turned out to be a one off subsidy to help retain OAP votes.

The loudest cries for "substance" are from our opponents. aided and abetted by right wing commentators who have no political sense - we are not in government, we don't have to be detailed about intent.

Some very long posts on here, so not sure if anyone will read this far.

On Any Questions, I was very struck not so much by the luke-warm response from Matthew Taylor but by the agreement of the two political "neutrals" on the panel that IHT should be abolished. There were Bonnie Greer (?), of US origin but an impeccably liberal medea luvvie (and as ever with a wonderfully seductive Southern drawl, but that's by the way) and a cross-bench peer who was a former soldier but who also espoused centrist to leftist sentiments on most other topics. They then asked the audience and an overwhelming majority agreed that IHT should go (OK, so it was Richmond on Thames but aren't there a number of Lib Dem seats around there we need to win?).

This could have been a direct result of Tim's eloquence (the lad done well). But the more likely explanation is that south of the Wash at least, abolishing IHT is becoming a popular policy. It is not platinum after dark (see 08:31 a short way above). As the soft-toned American said, it (IHT, not platimum) is so old-fashioned.

We do not want to get into off-setting it by green taxes etc (although tactically it might make sense for Osborne to announce it when he announces green taxes, but with the headline offset for the latter being tax cuts for the lower paid). We have said that as the economy grows we will split the windfall to the tax revenues between tax cuts and (selective) expenditure increases. All a manifesto needs to say is that abolishing IHT, along with reducing business taxes and income tax on the lower paid, and overall tax simplification, are "early priorities"... and that we would expect to have made at least strong inroads into all four by the end of a five year Parliament with normal levels of economic growth.

Let's NOT have any nonsense about an IHT principal private residency exemption. That will just become another thing pumping up the housing market. However, total CGT exemption on death could well be modified as part of abolishing IHT so that the actual immediate revenue loss is somewhat reduced.